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Calculate the euro-based return an Italian investor would have realized by investing 10,000 into a $50 American stock on margin with only 40 percent down
Calculate the euro-based return an Italian investor would have realized by investing 10,000 into a $50 American stock on margin with only 40 percent down and 60 percent borrowed. The stock pays a $0.30 quarterly dividend, and after one year the investment sells for $54. The exchange rate has changed from 0.625 per dollar to 0.6875 per dollar. The interest on the margin loan is 1 percent per year. The margin loan is denominated in dollars. References Short Answer Difficulty: 2 Medium
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